The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 gives workers, and their families who lose their health benefits, the right to choose continued group health benefits provided by their group health plan for a limited period of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan.
The law generally applies to all group health plans maintained by private-sector employers with 20 or more employees, or by state or local governments. The law does not apply to plans sponsored by the Federal Government or by churches and certain church-related organizations. In addition, many states have laws similar to COBRA, including those that apply to health insurers of employers with less than 20 employees (sometimes called mini-COBRA).
COBRA outlines how employees and family members may elect continuation coverage. It also requires employers and plans to provide notice. The US Department of Labor provides model notices on their website: https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra
In the opening paragraph, I provided an overview of the circumstances the following will include more detail. Qualifying events are events that cause an individual to lose his or her group health coverage. The type of qualifying event determines who the qualified beneficiaries are for that event and the period of time that a plan must offer continuation coverage. COBRA establishes only the minimum requirements for continuation coverage; a plan may always choose to provide longer periods of the latter.
Below are qualifying events for covered employees if their employer causes the covered employee to lose coverage:
- Termination of the employee’s employment for any reason other than gross misconduct; or
- Reduction in the number of hours of employment.
The following are qualifying events for the spouse and dependent child of a covered employee if they cause the spouse or dependent child to lose coverage:
- Termination of the covered employee’s employment for any reason other than gross misconduct;
- Reduction in the hours worked by the covered employee;
- Covered employee becomes entitled to Medicare;
- Divorce or legal separation of the spouse from the covered employee; or
- Death of the covered employee.
In addition to the above, the following is a qualifying event for a dependent child of a covered employee if it causes the child to lose coverage:
- Loss of dependent child status under the plan rules. Under the Affordable Care Act, plans that offer coverage to children on their parents’ plan must make the coverage available until the adult child reaches the age of 26.
Federal COBRA coverage extends to a maximum of 18 or 36 months, depending on the type of qualifying event that triggered coverage. Mini-COBRA laws, on the other hand, range from a coverage period of three months to an indefinite coverage period, as long as the employee meets certain criteria. With such a wide variation in coverage periods from state to state, it can be very easy to confuse mini-COBRA coverage limits for different groups of employees, depending on where they’re based.
Here is a summary of a some state’s mini-COBRA laws:
- Arkansas: All employers, regardless of the number of employees are required to provide 120 days of continued coverage.
- Arizona: Passed a new Mini-COBRA law in January 2019, covering employers with one to 20 employees for up to 18 months of continued coverage.
- California: Employers with 2 through 19 employees must provide coverage for up to 36 months. Employers with 20 or more employees will fall under the Cal-COBRA for any shortfall of up to 36 months.
- Colorado: Any size employer group policy where federal COBRA does not apply.
- Connecticut: All employers for up to 30 months of coverage.
- Delaware: Employers with 1-19 employees on a typical business day during the preceding year with coverage for up to 9 months.
- DC: Employers with fewer than 20 employees, with coverage for up to 3 months.
- Florida: Employers with fewer than 20 employees, and in some cases, continued coverage for 29 months, due to disability, at a cost of 150% of the premium for each additional month past 18.
- Georgia: Employers with fewer than 20 employees, and anyone 60 or older, can continue on a plan until they qualify for Medicare or another plan; the premiums could cost up to 120% of the premium.
- Hawaii: All employers of employees who have been employed for four consecutive weeks, if the employee is hospitalized or otherwise prevented by sickness from working.
- Illinois: All employers, and spouses 55 or older, can remain covered until they are eligible for Medicare, with an administrative cost of up to 20% of the premium.
- Iowa: Employers with fewer than 20 employees, with coverage for up to 9 months.
- Kansas: All group policies with coverage for up to 18 months.
- Kentucky: Employers with fewer than 20 employees, with coverage for up to 18 months.
- Louisiana: Employers with fewer than 20 employees, with coverage for up to 12 months.
- Maine: Employers with fewer than 20 employees who have been employed for at least 6 months, with coverage for up to one year from the last day of work.
- Maryland: All employers are covered with continued coverage for generally 18 months. Special rules apply for divorced spouses.
- Minnesota: Employers with 2 or more employees, with coverage for 18 or 36 months, depending upon the qualifying event.
- Massachusetts: Employers with 2 through 19 employees; coverage can be extended to 30 months if an employee becomes disabled, and 36 months for dependents, if an employee dies.
- Missouri: Generally, any employer not subject to federal COBRA, with coverage for up to 18 months. Coverage may be extended up to 36 months if other qualifying events occur during the initial 18 months.
- Nebraska: Coverage for up to six months, as long as the employee was involuntarily terminated not due to misconduct.
- New Hampshire: Employers with more than one employee, with coverage of 18, 29, or 36 months, depending upon the qualifying event.
- New Jersey: All employers with 2 through 50 employees working at least 25 hours per week, with coverage for 18, 29, or 36 months, depending upon the situation of termination or separation reason.
- New York: Employers with fewer than 20 employees, with coverage up to 36 months.
- New Mexico: All employers with continued coverage for up to 6 months.
- North Carolina: All employers with continued coverage for up to 18 months.
- North Dakota: Employers with fewer than 20 employees and continuation coverage lasting 39 weeks, except those who lost coverage due to divorce, which provides 36 months of continuation coverage.
- Ohio: All employers with continued coverage for up to 12 months
- Oklahoma: Employers with fewer than 20 employees, and coverage of at least two months, can be extended 3 or 6 months, depending upon the circumstances.
- Oregon: Employers with less than 20 employees, with coverage for up to 9 months.
- Pennsylvania: Employers with 2 through 19 employees, with coverage up to 9 months; the premium can be up to 105% of the group rate.
- Rhode Island: All employers, and the termination needs to be involuntary. Coverage can be for up to 18 months.
- South Carolina: All employers are covered, and coverage is for the month of termination plus 6 additional months.
- South Dakota: Employers with less than 20 employees and coverage for 18, 29, or 36 months. After 18 months, the premium jumps to 150% of the group rate.
- Tennessee: All employers, and coverage is for the month of termination plus 3 additional months; in the event of divorce or death of an insured spouse, 15 additional months.
- Texas: All employers with coverage of 9 months, if federal COBRA does not apply for an additional 7 months after federal COBRA.
- Utah: Employers with fewer than 20 employees, with coverage of generally 12 months.
- Vermont: Employers with fewer than 20 employees, with coverage of up to 18 months.
- Virginia: Employers with less than 20 employees, with coverage of up to 12 months.
- Washington: All employers are covered and continued coverage, for generally 6 months.
- West Virginia: Employers with less than 20 employees, with coverage of up to 18 months.
- Wisconsin: All employers with group policies; coverage is for up to 18 months.
- Wyoming: All employers not subject to federal COBRA are covered for up to 12 months of coverage.
Alabama, Arkansas, Arizona, Idaho, Indiana, Michigan, Montana, and Nevada do not have min-COBRA laws, so you would only need to comply with the federal regulations if you have 20 or more employees.
As you can see the COBRA laws can be quite complex to manage, especially if you have employees in multiple states, or for that matter there are some states that have their own complexities. It is best if you utilize a COBRA administrator who will manage the process and ensure compliance. Fines and penalties are not uncommon for employers who are not in compliance with the COBRA laws. If you are a PayMaster client, we work with administrators that can make it a seamless administrative process.
There is an added bonus if you made it this far. Between April 1, 2021 and September 30, 2021, any employee who has been involuntarily separated can be eligible for a COBRA subsidy, meaning they get to continue their coverage for free. The employer will then be paid for the coverage via an immediate payroll tax credit. More information can be found in this article https://blog.paymaster.com/american-rescues-plan-act-cobra-subsidy/
While I make every attempt to ensure the accuracy and reliability of the information provided in this article, the information is provided “as-is” without warranty of any kind. There are many details and states listed above and the information is not comprehensive or conclusive. PayMaster, Inc and Romeo Chicco do not accept any responsibility or liability for the accuracy, content, completeness, legality, or reliability of the information contained. Consult with your CPA, Attorney, HR Professional, or COBRA Administrator to ensure compliance.